I 

118TH CONGRESS 

2D SESSION H. R. 9162 

To amend the securities laws to require certain disclosures and reports with 

respect to the exposure of issuers to China and the threat of sudden 

loss of market access between the United States and China, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 25, 2024 

Mr. LUETKEMEYER (for himself, Mr. MOOLENAAR, and Mr. NEWHOUSE) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the securities laws to require certain disclosures 

and reports with respect to the exposure of issuers to 

China and the threat of sudden loss of market access 

between the United States and China, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘PRC Risk Trans5 parency Act’’. 


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1 SEC. 2. CHINA EXPOSURE DISCLOSURES. 

2 (a) COVERED ISSUER DISCLOSURES.—Section 13 of 

3 the Securities Exchange Act of 1934 (15 U.S.C. 78m) is 

4 amended by adding at the end the following: 

5 ‘‘(t) CHINA EXPOSURE DISCLOSURES.— 

6 ‘‘(1) IN GENERAL.—Each covered issuer re7 quired to file an annual report under subsection (a) 

8 shall disclose in that report the following informa9 tion, to the extent the information would be material 

10 to investors, with respect to the period 1 year prior 

11 to the disclosure under this subsection: 

12 ‘‘(A) CHINA EXPOSURE.— 

13 ‘‘(i) The percentage of the total rev14 enue and profits of the issuer that are de15 rived from each of— 

16 ‘‘(I) the People’s Republic of 

17 China (‘China’); 

18 ‘‘(II) Hong Kong; and 

19 ‘‘(III) the Xinjiang Uyghur Au20 tonomous Region. 

21 ‘‘(ii) The percentage and the total 

22 value of the capital investment of the 

23 issuer that is located in each of— 

24 ‘‘(I) China; 

25 ‘‘(II) Hong Kong; and 


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1 ‘‘(III) the Xinjiang Uyghur Au2 tonomous Region. 

3 ‘‘(iii) The percentage and the total 

4 value of the supply chain of the issuer that 

5 is sourced from each of— 

6 ‘‘(I) China; 

7 ‘‘(II) Hong Kong; and 

8 ‘‘(III) the Xinjiang Uyghur Au9 tonomous Region. 

10 ‘‘(iv) Details on any joint venture with 

11 a covered entity, including— 

12 ‘‘(I) the covered entity in the 

13 joint venture; 

14 ‘‘(II) the percentage of total rev15 enue and of total profits of the issuer 

16 that are derived from the joint ven17 ture; and 

18 ‘‘(III) the percentage and the 

19 total value of the capital investment 

20 associated with the joint venture. 

21 ‘‘(B) THREAT OF SUDDEN LOSS OF MAR22 KET ACCESS.— 

23 ‘‘(i) The anticipated impact of the sce24 nario described in paragraph (2) on the 

25 business operations, supply chain, revenues 


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1 and profits, and future earnings of the 

2 issuer, to the extent it would be material 

3 to investors. 

4 ‘‘(ii) Whether the issuer has a plan in 

5 place to deal with the scenario described in 

6 paragraph (2). 

7 ‘‘(iii) The outlines of the plan de8 scribed in clause (ii) and any actions the 

9 issuer is taking to prepare for the scenario 

10 described in paragraph (2). 

11 ‘‘(C) RELATIONSHIPS WITH CERTAIN ENTI12 TIES.—A list of business relationships with any 

13 of the following entities, their affiliates, and 

14 their subsidiaries: 

15 ‘‘(i) Any entity on the Non-SDN Chi16 nese Military-Industrial Complex Compa17 nies List (NS-CMIC List) maintained by 

18 the Office of Foreign Assets Control of the 

19 Department of the Treasury under Execu20 tive Order 14032 (86 Fed. Reg. 30145; re21 lating to addressing the threat from securi22 ties investments that finance certain com23 panies of the People’s Republic of China), 

24 or any successor order. 


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1 ‘‘(ii) Any Chinese military company 

2 identified by the Secretary of Defense pur3 suant to section 1260H of the William M. 

4 (Mac) Thornberry National Defense Au5 thorization Act for Fiscal Year 2021 (Pub6 lic Law 116–283; 10 U.S.C. 113 note). 

7 ‘‘(iii) Any entity included on any of 

8 the following lists maintained by the De9 partment of Commerce in the following lo10 cations of the Export Administration Reg11 ulations set forth in subchapter C of chap12 ter VII of title 15, Code of Federal Regu13 lations: 

14 ‘‘(I) The Entity List set forth in 

15 Supplement No. 4 to part 744 of the 

16 Export Administration Regulations or 

17 any successor regulations. 

18 ‘‘(II) The Denied Persons List as 

19 described in section 764.3(a)(2) of the 

20 Export Administration Regulations or 

21 any successor regulations. 

22 ‘‘(III) The Military End User 

23 List set forth in Supplement No. 7 to 

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1 tion Regulations or any successor reg2 ulations. 

3 ‘‘(iv) Any entity on which sanctions 

4 have been imposed by the Office of Foreign 

5 Assets Control of the Department of the 

6 Treasury in connection with human rights 

7 abuses. 

8 ‘‘(v) Any entity that produces equip9 ment that is prohibited under the Report 

10 and Order, Order, and Further Notice of 

11 Proposed Rulemaking of the Federal Com12 munications Commission in the matter of 

13 Protecting Against National Security 

14 Threats to the Communications Supply 

15 Chain through the Equipment Authoriza16 tion Program (ET No. 21–232) and Pro17 tecting Against National Security Threats 

18 to the Communications Supply Chain 

19 through the Competitive Bidding Program 

20 (EA Docket No. 21–233; FCC 22–84; 

21 adopted November 11, 2022). 

22 ‘‘(vi) An entity on the Uyghur Forced 

23 Labor Prevention Act Entity List of the 

24 Forced Labor Enforcement Task Force. 


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1 ‘‘(D) TIES TO THE GOVERNMENT OF THE

2 PEOPLE’S REPUBLIC OF CHINA.—A list of the 

3 following: 

4 ‘‘(i) Employees with a management 

5 role in the issuer that are members of the 

6 Chinese Communist Party, including each 

7 employee’s role within the issuer. 

8 ‘‘(ii) Any business relationships with 

9 an agency or instrumentality of the govern10 ment of the People’s Republic of China, in11 cluding the provision of goods, services, or 

12 technology to the People’s Liberation 

13 Army, the Ministry of State Security, or 

14 other security or intelligence services in the 

15 People’s Republic of China. 

16 ‘‘(iii) Any investment received from 

17 the government of the People’s Republic of 

18 China or an agency or instrumentality 

19 thereof. 

20 ‘‘(iv) Any requests from any Chinese 

21 Communist Party official or agency or in22 strumentality of the government of the 

23 People’s Republic of China (including re24 quests made under the People’s Republic 

25 of China Intelligence Law of 2017 or the 


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1 Counter-Espionage Law) that conflict with 

2 the issuer’s obligations under this Act, the 

3 Securities Act of 1933, or the Sarbanes4 Oxley Act of 2002. 

5 ‘‘(2) SCENARIO.— 

6 ‘‘(A) IN GENERAL.—The scenario de7 scribed in this paragraph is a scenario where, 

8 owing to an act of Chinese military aggres9 sion— 

10 ‘‘(i) the President imposes sanctions 

11 on China, Chinese entities, and those who 

12 transact with China or Chinese entities of 

13 a similar type and magnitude as the sanc14 tions imposed on the Russian Federation, 

15 Russian entities, and those who transact 

16 with the Russian Federation or Russian 

17 entities in response to the Russian Federa18 tion’s February 2022 invasion of Ukraine; 

19 ‘‘(ii) the Secretary of Commerce im20 plements export controls with respect to 

21 China of a similar type as the Secretary 

22 implemented with respect to the Russian 

23 Federation following the Russian Federa24 tion’s February 2022 invasion of Ukraine; 


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1 ‘‘(iii) trade between the United States 

2 and China declines by 80 percent and com3 pletely ceases in goods with military end4 use or dual-use applications; 

5 ‘‘(iv) the Chinese government imposes 

6 similar sanctions, export controls, and 

7 trade restrictions on the United States and 

8 United States companies as the Russian 

9 Federation government did following the 

10 Russian Federation’s February 2022 inva11 sion of Ukraine; and 

12 ‘‘(v) the Chinese government seizes all 

13 China-based assets of American companies 

14 that could be re-purposed for military pro15 duction. 

16 ‘‘(B) REVISIONS.—On January 1, 2028, 

17 and every 3 years thereafter, the Financial Sta18 bility Oversight Council may revise the scenario 

19 described under subparagraph (A) by pub20 lishing a new scenario that, after consultations 

21 with other executive branch officials, seems 

22 most likely to occur as a result of Chinese mili23 tary aggression. 

24 ‘‘(3) BOARD OF DIRECTORS CERTIFICATION.— 

25 The board of directors of a covered issuer required 


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1 to make a disclosure under paragraph (1) shall cer2 tify that the board has reviewed and affirmed the 

3 disclosure. 

4 ‘‘(4) RULEMAKING.— 

5 ‘‘(A) IN GENERAL.—Not later than the 

6 end of the 60-day period beginning on the date 

7 of enactment of this subsection, the Commis8 sion shall issue rules to carry out the amend9 ments made by this section. 

10 ‘‘(B) PROPRIETARY INFORMATION AND

11 TRADE SECRETS.—In issuing the rules required 

12 under subparagraph (A), the Commission shall, 

13 in consultation with the Attorney General and 

14 the National Security Council, ensure that 

15 issuers may make the disclosure of information 

16 required under such rules without disclosing 

17 proprietary information or trade secrets. 

18 ‘‘(C) SAFE HARBOR.—In issuing the rules 

19 required under subparagraph (A), the Commis20 sion shall establish rules under which a covered 

21 issuer shall not be held liable for statements 

22 that were compiled with reasonable due dili23 gence and to the best of the covered issuer’s 

24 knowledge. 


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1 ‘‘(5) DEFINITIONS.—In this subsection, the fol2 lowing definitions apply: 

3 ‘‘(A) CHINA.—The term ‘China’ means the 

4 People’s Republic of China, including all Special 

5 Administrative Regions. 

6 ‘‘(B) CONTROL.—The term ‘control’ has 

7 the meaning given in section 800.208 of title 

8 31, Code of Federal Regulations (as in effect on 

9 the date of enactment of this subsection). 

10 ‘‘(C) COVERED ENTITY.—The term ‘cov11 ered entity’ means an entity— 

12 ‘‘(i) that is incorporated in, has a 

13 principal place of business in, or is orga14 nized under the laws of the People’s Re15 public of China; 

16 ‘‘(ii) the equity securities of which are 

17 primarily traded in the ordinary course of 

18 business on one or more exchanges in the 

19 People’s Republic of China; 

20 ‘‘(iii) that is the Chinese Communist 

21 Party, or the state or the government of 

22 the People’s Republic of China, as well as 

23 any political subdivision, agency, or instru24 mentality thereof; or 


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1 ‘‘(iv) that is subject to the direction or 

2 control of any entity described in clause 

3 (i), (ii), or (iii). 

4 ‘‘(D) COVERED ISSUER.—The term ‘cov5 ered issuer’ means— 

6 ‘‘(i) an issuer— 

7 ‘‘(I) with respect to which— 

8 ‘‘(aa) at least 5 percent of 

9 the revenue of the issuer is de10 rived from the Chinese market; 

11 ‘‘(bb) at least 5 percent of 

12 the capital investment of the 

13 issuer, by value, is located in 

14 China; or 

15 ‘‘(cc) at least 5 percent of 

16 the supply chain of the issuer, by 

17 value, is sourced from China; and 

18 ‘‘(II) that has a market capital19 ization of $1,000,000,000 or more at 

20 any point in the previous 365 days; 

21 and 

22 ‘‘(ii) an issuer with respect to which— 

23 ‘‘(I) at least 25 percent of the 

24 revenue of the issuer is derived from 

25 the Chinese market; 


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1 ‘‘(II) at least 25 percent of the 

2 capital investment of the issuer, by 

3 value, is located in China; or 

4 ‘‘(III) at least 25 percent of the 

5 supply chain of the issuer, by value, is 

6 sourced from China.’’. 

7 (b) INVESTMENT ADVISER DISCLOSURES.—Section 

8 204 of the Investment Advisers Act of 1940 (15 U.S.C. 

9 80b–4) is amended by adding at the end the following: 

10 ‘‘(g) REPORT ON THE LOSS OF MARKET ACCESS TO

11 CHINA TO PRIVATE FUNDS ADVISED BY A COVERED IN12 VESTMENT ADVISER.— 

13 ‘‘(1) IN GENERAL.—The Commission shall, by 

14 rule, require each covered investment adviser, for 

15 each private fund advised by the covered investment 

16 advisor, to disclose to the private fund and the Com17 mission, every quarter, a plain English report that 

18 outlines the anticipated effects, to the extent it 

19 would be material to investors, of a scenario of the 

20 type described in section 13(t)(2) of the Securities 

21 and Exchange Act of 1934 on the returns of such 

22 fund. 

23 ‘‘(2) SAFE HARBOR.—A covered investment ad24 viser that makes a disclosure under paragraph (1), 

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1 edge of the covered investment adviser after reason2 able investigation and due diligence and consistent 

3 with the fiduciary duty of the covered investment ad4 viser, shall not be held liable for such disclosure. 

5 ‘‘(3) BOARD OF DIRECTORS CERTIFICATION.— 

6 The board of directors of a covered investment ad7 viser required to make a disclosure under paragraph 

8 (1) shall certify that the board has reviewed and af9 firmed the disclosure. 

10 ‘‘(4) COVERED INVESTMENT ADVISER DE11 FINED.—In this subsection, the term ‘covered invest12 ment adviser’ means an investment adviser with as13 sets under management of $500,000,000 or more at 

14 any point in the previous 365 days. 

15 ‘‘(h) REPORT ON EXPOSURE TO COVERED FOREIGN

16 ENTITIES.— 

17 ‘‘(1) IN GENERAL.—The Commission shall, by 

18 rule, require each covered investment adviser to dis19 close to the Commission, every quarter— 

20 ‘‘(A) for each investment company advised 

21 by the covered investment advisor— 

22 ‘‘(i) the total exposure of the invest23 ment company to covered foreign entities; 


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1 ‘‘(ii) a list of each security issued by 

2 a covered foreign entity and held by the in3 vestment company; and 

4 ‘‘(iii) the value of each holding; 

5 ‘‘(B) the total exposure of all investment 

6 companies advised by the covered investment 

7 adviser to covered foreign entities; 

8 ‘‘(C) a list of each security issued by a cov9 ered foreign entity and held by an investment 

10 company advised by the covered investment ad11 viser; and 

12 ‘‘(D) the value of each holding identified 

13 under subparagraph (C). 

14 ‘‘(2) DEFINITIONS.—In this subsection: 

15 ‘‘(A) COVERED FOREIGN ENTITY.—The 

16 term ‘covered foreign entity’ means a covered 

17 entity, as defined under section 13(t)(5) of the 

18 Securities and Exchange Act of 1934. 

19 ‘‘(B) COVERED INVESTMENT ADVISER.— 

20 The term ‘covered investment adviser’ has the 

21 meaning given the term under subsection 

22 (g)(4).’’. 

23 (c) INVESTMENT COMPANY DISCLOSURES.—Section 

24 30 of the Investment Company Act of 1940 (15 U.S.C. 

25 80a–29) is amended by adding at the end the following: 


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1 ‘‘(l) REPORT ON EXPOSURE TO COVERED FOREIGN

2 ENTITIES AND VARIABLE INTEREST ENTITIES.— 

3 ‘‘(1) IN GENERAL.—The Commission shall, by 

4 rule, require each registered investment company to 

5 disclose to the Commission, every quarter— 

6 ‘‘(A) the total exposure of the investment 

7 company to covered foreign entities, including; 

8 ‘‘(i) a list of each security issued by a 

9 covered foreign entity and held by the in10 vestment company; and 

11 ‘‘(ii) the value of each holding; and 

12 ‘‘(B) the total exposure of the investment 

13 company to variable interest entities, includ14 ing— 

15 ‘‘(i) a list of each security issued by a 

16 variable interest entity held by the invest17 ment company; and 

18 ‘‘(ii) the value of each holding. 

19 ‘‘(2) COVERED FOREIGN ENTITY DEFINED.—In 

20 this subsection, the term ‘covered foreign entity’ 

21 means a covered entity, as defined under section 

22 13(t)(5) of the Securities and Exchange Act of 

23 1934.’’. 

24 (d) VARIABLE INTEREST ENTITY EXPOSURE.—Sec25 tion 204(b)(3)(C) of the Investment Advisers Act of 1940 


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1 (15 U.S.C. 80b–4(b)(3)(C)) is amended by inserting be2 fore the semicolon the following: ‘‘, including total expo3 sure to variable interest entities, a list of each security 

4 issued by a variable interest entity held in the fund, and 

5 the value of those securities’’. 

6 (e) NO EXPANSION OF LIABILITY.—No provision 

7 under the amendments made by this section requiring the 

8 disclosure of information shall give rise to a claim under 

9 the Securities Act of 1933 or the Securities Exchange Act 

10 of 1934 unless the disclosure is both— 

11 (1) false or misleading; and 

12 (2) material to an investment decision such that 

13 there is a substantial likelihood that a reasonable in14 vestor would consider the information important in 

15 assessing the risk-adjusted financial returns from 

16 the investment decision. 

Æ 


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